Gold futures remain around 4-week high on haven demand

Gold futures have retreated in commodities trading markets today (October 16th), but continue to hold around a one-month high on safe-haven demand. 

This comes after the publication of disappointing data relating to US economic progress, heightening concerns over global growth.

Futures surged to five-week highs yesterday after a string of weaker-than-anticipated reports fuelled suggestions the Federal Reserve will be required to hold off on lifting interest rates, which have been kept close to zero as the country recovers from the global financial crisis of 2008.

Official figures showed US retail sales declined by 0.3 per cent last month, missing expectations for a reduction of just 0.1 per cent. This follows a 0.6 per cent gain in August. 

Core retail sales - which excludes automobiles - dropped by 0.2 per cent, despite the fact analysts predicted a 0.3 per cent gain, which would have matched the previous month's advance.

Separately, it was revealed US producer price inflation dipped by 0.1 per cent in September. This comes after a flat month in August and confounded expectations for a 0.1 per cent gain.

Furthermore, the Federal Reserve of New York's index of manufacturing activity in the region tumbled to 6.2 for October - a six-month low. This is down from a reading of 27.5 last month and a much smaller drop had been anticipated.

If the Fed does decide to delay lifting interest rates, this would be considered to be bullish for bullion, as it reduces the cost of holding on to the metal. When borrowing costs are higher, investors generally prefer payout-bearing assets.

Gold for December delivery closed 0.85 per cent higher yesterday at $1,244.80 per ounce on the Comex division of the New York Mercantile Exchange - its strongest level since September 11th.

Early in today's European session, the contract declined by 0.42 per cent to $1,222.80 per ounce, though this remains close to a four-week high.